Download (28Mb) - LSE Theses Online

the crucial factor in generating and sustaining a recovery 46 . By the time of the 1979
oil shock, the economy had witnessed a consistent rise in employment and income
from tourism which was beginning to have an increasingly important contribution to
the external balance, having finally surpassed its 1973 income level (in constant
prices). Manufacturing however, retained its position as a more important sector in
terms of income and particularly employment until at least the mid 1980's.
Figure 5.10 The contribution of tourism & manufacturing to GDP in the
Republic ofCyprus (in constant 1980 US$) 1970-1982.
manufacturing
Trade & tourism
a\ o\ o\ o\
Source: Rep. of Cypras. 1994. "Historical Data on the Economy of Cyprus, 1960-91." Nicosia: Dept. ofSta lis tics & Research, pp.79-80.
Seemingly, because of the loss of fixed capital, a revival of the construction
industry was crucial to the recovery of tourism. Despite its considérable
significance, there are problems drawing too wide ranging conclusions about the
economic rôle of the construction industry, and more specifically the rôle of the
public sector in providing permanent emergency housing in the immediate aftermath
of the war. The point is that direct government investment was not that significant.
Government spending was more important in terms of targeting incentives which
46 Andreou E. "The Economy of Cyprus during the Last Three Decades" (an econometrie study),
Conference on "The Development of the Cypriot Economy", Nicosia: Bank of Cyprus, 28-
29/4/1995. Andreou argues that fiscal stimulus only worked because it created employment rather
than consumer demand (in a tiny open economy like Cyprus).
249